If you're not using Google’s AdWords (or rival providers such as Yahoo or Microsoft), maybe you’ll get wise by seeing who does.

When Google rolled out pay-per-click advertising, it was the highly targeted, cost-effective sales tool that entrepreneurs and other niche marketers had always dreamed of.

Pay-per-click (PPC) enables marketers to target precise audiences (people who use certain keywords in their Internet searches), and to pay only when a prospect clicks on their ad. While it’s a perfect tool for small business, it’s become big business. Of Google’s 2011 revenue of $37.9-billion, all but $1.4-billion came from advertising.

If you’re not using Google’s AdWords (or rival providers such as Yahoo or Microsoft), maybe you’ll get wise by seeing who does. Look at some of the work done by search-marketing consultant Larry Kim, founder of Boston-based WordStream Inc.

In a January blogpost, Kim analyzed AdWords activity in the U.S. to produce a list of the 20 industries that spent the most last year on Google advertising. Here are the top 10 industries, along with the top-spending organization in each category, and how much they’re estimated to have spent:

Kim says marketers can learn lots of things from analyses such as this. First, of course, is that pay-per-click works. Why else would smart companies such as Amazon and HP spend so much on it?

No. 2: PPC favours industries that “make a killing off each new client,” says Kim. Which is why insurance companies are such heavy users.

No. 3: Consumers are still spending. According to Kim’s keyword analysis, “Despite a weak economy and high unemployment, Americans are still splurging on vacations and buying lots and lots of stuff (and we’re willing to refinance our homes and apply for new credit cards, despite bad credit, to get it).”

In a similar post last August, Kim used his search-engine science to calculate Google’s 20 most valuable keywords (a combination of the most-used keywords and the words that fetch the highest bids from PPC advertisers). Here’s the top seven:

Credit (example keywords include “home equity line of credit” and “bad credit home buyer”)

Lawyer (“personal injury lawyer,” “criminal defense lawyer)

Donate (“car donation centres,” “donating a used car”)

While the cost of advertising against Google keywords and phrases begins at 5¢ per click, it’s unnerving to learn that some searches net Google as much as $50 per click. Proof, if it’s needed, that pay-per-click ads can really pay off.

Again, Kim notes, the “keyword categories with the highest volumes and costs represent businesses with very high lifetime customer value – in other words, these industries can afford to pay a lot to acquire a new customer.”

He offers tips such as these for getting the best value out of your pay-per-click investment:

Manage your landing page for best results: Success in PPC advertising is all about conversion rate: the number of customers who click through your ad and complete a transaction (e.g., buy your product or sign up for your newsletter) divided by the total number of ad clicks. The average conversion rate on AdWords is about 2%, Kim says. “But we often see landing pages converting at the 20% or even 30% range. The key to landing page optimization is to keep trying out different types of offers and testing how people respond to them.”